U.S. adds 243,000 jobs in January

Jobless rate falls to 8.3%; November, December gains revised higher

WASHINGTON (MarketWatch) — U.S. companies hired the most workers in nine months and the nation’s unemployment rate fell to the lowest level in almost three years, according to the government’s employment report for January.

The U.S. gained 243,000 jobs last month and the unemployment rate dipped to 8.3% as nearly every sector of the economy added workers, the Labor Department said Friday.

The increase in hiring was the biggest since last April and supplies further evidence that the economy continues to strengthen after a slowdown last summer. The U.S. has added an average of 183,000 jobs a month in the past five months. See charts on the jobs report.

Hiring has also spread to most sectors of the economy. Jobs were added last month in manufacturing and construction, professional services, retail, health care, and food and restaurant establishments.

The increase easily surpassed Wall Street forecasts. Economists surveyed by MarketWatch, for example, predicted the U.S. would add a seasonally adjusted 121,000 jobs last month, with an unemployment rate of 8.5%.

Investors reacted positively. The Dow Jones Industrial Average
DJIA, +0.45%
ended at its highest level in more than four years.

“It definitely was a big surprise,” said Jennifer Lee, senior economist at BMO Capital Markets. “The gains were broad based across all industries.”

The Obama administration, with an eye toward the presidential election in November, was also cheered by the news. A falling rate helps Obama’s chances of winning a second term. The likelihood of Obama winning reelection improved 2.2% to 56.8%, according to the contract that trades on the prediction market Intrade.

“The economy is speeding up,” Obama said Friday.

Yet Republicans said the president’s policies are to blame for the slow recovery following the 2007-2009 recession. “We can do better,” said Mitt Romney, who looks likely to be Obama’s opponent in the fall. Read article on reaction to jobs.

Affected by revisions

As part of its report, the Labor Department also issued its annual “benchmark” changes to employment data over the past 21 months. The newly revised data show that the U.S. gained 1.82 million jobs in 2011, up from an initial estimate of 1.64 million.

In December, the increase in payrolls was revised up to 203,000 from an initial report of 200,000. And November payrolls were revised up to 157,000 from 100,000.

Some economists warn against reading too much into the January jobs report because of the benchmark changes, which revise population levels, the size of the labor force and other key data. The revisions go back five years in some cases.

They also point out that unseasonably warm weather may have boosted employment last month beyond the usual levels in industries such as construction. Construction firms added a combined 52,000 jobs in January and December.

“There are some caveats to what’s a pretty strong report,” said Sam Bullard, senior economist at Wells Fargo. “I am still cautious as to whether we have stepped up the level of hiring to the 200,000 to 250,000 range.”

Although hiring has accelerated since the end of last summer, the U.S. still has a long way to go to recoup all the jobs lost during the recession. The nation has 5.6 million fewer jobs now than it did four years ago.

As of last month, 12.76 million people were officially classified as unemployed, and 5.5 million have been without a job for more than six months. That was little changed from December.

Looked at another way, the unemployment rate is an even higher 15.1% if the data include people with part-time positions who cannot find full-time jobs as well as those who have recently given up looking for work. The so-called U6 rate fell from 15.2% in December.

The U.S. needs to add about 250,000 jobs a month for several years to bring the unemployment rate back down to pre-recession levels. The jobless rate ranged from 3.8% to 6.2% in the seven years prior to recession.

Inside the report

The private sector created all of the jobs last month, adding 257,000.

The biggest increase occurred in professional and business services: Companies in these fields hired a net 70,000 employees.

The manufacturing sector, meanwhile, boosted payrolls by 50,000. Manufacturers have led the U.S. recovery, bolstered by a weaker dollar and higher exports.

The only private industry to suffer sizable job losses was Hollywood. Employment fell by 8,000.

Government employment also declined once again, though at a slower pace. Some 14,000 jobs were eliminated, mainly at the local level. More than 600,000 government jobs have disappeared in the past few years.

Average hourly earnings, meanwhile, rose by 4 cents, or 0.2%, to $23.29 in January. That was in line with expectations.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.